I have half a million in cash - what are my options?

[Steve Matthews]

I have $500,000 cash that I'd like to deploy into real estate. I am thinking about going the turnkey route. My question has to do w/ financing.

I am looking at potentially buying SFRs in the 100K range. If I were to pay all cash for the properties, maybe I could buy 5 homes. But if I could finance the homes w/ 20% down, I could potentially buy 2.5 million worth of homes, which would be about 25 homes worth $100K each. My cash on cash return and total ROI would be much higher than if I had purchased just 5 homes for cash (I really wouldn't buy 25 homes and have no money left over. I'd probably buy 15 homes and have some reserves aside to deal w/ issues that come up).

Here's my problem: While I have excellent credit, I only make about $2,000 in income per month. Is it possible for someone like me to qualify to buy so many homes or am I dreaming and will have to pay all cash to buy properties?

Since these properties will be used as rentals, can I buy maybe a couple of properties a year and then use the income from the properties to help finance my next two properties and so on?

Thank you for any feedback, it would be much appreciated.

[David Thompson]

Steve,

Do you meet accredited investor status based on net worth? If yes, since you are thinking turnkey, why buy all those SFRs and complicate your life w/15 homes and try to get financing, etc. Why not take some of that money and look into a passive opportunity w/scale in that of large MF apartments. That is one idea that would seem to work for you amongst others but seeing that you want cash flow, don't want to worry about financing a deal, just go find expert (syndicators) that can get you into deals that create excellent cash flow and IRR (think 10% CoC and 20% IRR as achievable in this space) and let the syndicators leverage their assets to get the financing, take all the risk, you come in as a limited partner, help fund the deals and get paid quarterly cash distributions. Often times value add sponsors will refinance after a few short years once they finished the renovations of the property, inserted new property management that know how to value engineer the financial operations to increase the NOI. This is why the big money is in commercial real estate. They don't monkey around w/bunches of SFRs and can get 300 units under one property ownership w/one loan, expert management and take advantage of scale / forced appreciation which is not something in the SFRs lingo kit. Something to ponder.